CRITICAL SITUATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A005900010001-2
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 79
• Document Creation Date: December 12, 2016
• Document Release Date: June 26, 2002
• Sequence Number: 1
• Publication Date: September 30, 1947
• Content Type: SUMMARY

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BOOK VII
TOP SECRET DAILY SMARI
1 July 1947 (#420) ? 30 Sept 1947 (#h96)
zprrea '3 COPT
DIA AND DOS REVIEWS COMPLETED
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CRITICAL SITUATIONS
EUROPE AN RECOVERY -
On the assumption that aid from? the European recovery program
,will not be forthcoming until April, the French have asked the US
for $150 million in aid within the next two weeks.
TRIESTE
No significant new development.
GREECE
No significant new development.
INDONESIA
No significant new development.
THE C.I.A. HAS NO OBJECTION
TO THE DECLASSIFICATION OF
THIS DOCUMENT.
No.
?=1
CHINA
Current reports that the Chinese Communists have been under-
taking a general withdrawal from the Shantung peninsula, where
Nationalist forces are advancing on the port of Chefoo, indicate
that the Communists are continuing their strategy of avoiding
open combat under adverse conditions and of preserving their
strength for long-term warfare of attrition (see item 4).
Doeument No. 0 77
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DDA Memo, 4 Apr 77
11- Auth: DDA- REG. 7778/1763
Date: APR 19 By
CONFIDENTIAL
3O
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GENERAL
I. USSR to acceA 25 November date for CFM--The Soviet Political
Adviser in Berlin has told Ambassador Murphy that the USSR is
agreeable to the 25 November date for the London meeting of the
CFM and to the 6 November date for the meeting of the deputies.
(The US, the UK, and France have already indicated their accept-
ance of these dates.)
2. DanishIkiami_tlerted to resist Soviet attack?US Minister Marvel
In Copenhagen reports that the Danish Navy was alerted on 27 Sep-
tember to resist any Soviet attempt to land on Bornholm. He stated
that this alert was based on increased Soviet naval activities in
the Koenigsberg (Kaliningrad) area.
(CIA Comment: If the Soviet Navy is conducting maneuvers
in the Koenigsberg area, they are probably without political or mili-
tary implication as far as Denmark is concerned. CIA considers
a Soviet attack on Bornholm too remote to merit consideration.)
3. Pro osed US offer to USSR on German assets in Austria--The
Department of State has informed US Legation Vienna that the US
Is prepared to offer the USSR, subject to UK and French approval,
a definite ownership percentage in those major enterprises in
Austria which, in the tripartite view, are Indisputably German.
The Department notes that any offer to the USSR must be realistic
In terms of current Soviet policy. The Department would make
the offer after the termination of the Allied Treaty Commission
but before the opening of the CFM, in an attempt to dispose of the
German assets problem in Austria and to pave the way for an
Austrian peace treaty and for withdrawal of all occupation forces.
(CIA Comment: The USSR will probably turn down this
offer unless the Kremlin believes that: (a) the USSR can eventually
force Austria into the Soviet orbit regardless of a treaty; and (b)
it is strategically important to eliminate Western occupation in
this part of Europe.)
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4. CHINA: Possible Communist withdrawal from the Shantun peninsula--
Commander US Naval ForceW?rn P111 commen
absence of Chinese Communist resistance to the present Nationalist
drive toward the northeast Shantung port of Chefoo may confirm re-
ports that the Communists have been undertaking a general withdrawal
from the Shantung peninsula to the western part of Shantung Province.
(CIA Comment: Chefoo is the port through which the Commu-
nists have reportedly effected water-borne communications with
southern Manchuria. Since the Communists are capable of using
other coastal points to maintain such communications and of with-
drawing from the peninsula without substantial losses, CIA doubts
that the loss of Chefoo will materially weaken the Communist poten-
tial in north China.)
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CRXT.C.A L T A r.,1: IONS
EITROPEA:i:iir RECOVERY
Premier Rarnadier, iu making a new appeal for a united Europe,
has stated that Germany must cooperate in any effective effort
toward economic recovery in Europe, but that Germany's re-
covery must not take precedence over that of other European
nations.
1"11113 B
A Yugoslav refusal to release five members of the Venezia
Giulia civil police force appears .t.1:) be a further effort to create
disorder in the free TerrtWry Tzleste (see item 4).
GREECE
No significant 2ew?deve1opmea.
DCGE S TA
No significant new de7,31e,pmorit.
CETTA
The ability of the National Governmen tai its hold on
South Manchuria is new being tested by intensified Communist
mitary activity (sec item 6).
Document No. 0 76
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DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Date: 1 U APR 197y By:
4a0talmijit#4444111
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GENERAL
1. UK disturbed or US sanin_trai_iff ne otiations--The UK
Ambassador has informed Secretary Marshall that: ? (a) Sevin n
and his cabinet colleagues are disturbed at the possibility of a 1
breakdoin of the US-UK tariff negotiations at Geneva because
such a development may spell the end of US-UK cooperation in the 7
ITO and because of the "political repercussions" ei US-UK rela-
tions and foreign policies; (b) the UK nevertheless cannot accept
US demands for the gradual elimination of empire trade prefer-
ences because Parliament would reject such a "sacrifice" of UK
economic interests; and (c) Bevin hopes that Secretary Marshall
will "see his way" to avoid a breakdown and asks that the US
give the UK Ambassador the opportunity to present his Govern-
ment's views on the situation before breaking off negotiations.
2. USSR reacpl--Foreign Minister Molotov has informed
US Ambassador Smith that the USSR cannot bear responsibility
for the article on President Truman in the LITERARY GAZETTE
(see Daily Summary of 25 September, item 3) and therefore "can-
not accept" Smith's recent protest. Molotov also maintained that
the Soviet press strives to present the "true facts of the life of
other countries, attaching special significance to the strengthen-
ing of friendly relations between peoples."
EUROPE
3. ITALY: De Gamres chances increased?Ambassador Dunn re-
ports his opinion that the NbirnPrergliiffi no-confidence motion
was a "serious tactical error" and that De Gasperi,by profiting
asjAptly from every opportunity; "is in a good position parliamentar-
Hy." Dunn also states that the extreme leftist group is embar-
rassed by its failure to gain the unqualified support of the moderate
left.
(CIA Comment: CIA concurs with the opinion that De
Gasperes chances of defeating the no-confidence vote are increased.
De Gasperi, however, will continue to be faced with political crises
until the base of his Government is broadened to include certain
moderate leftist elements.)
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4. TRIESTE: yliff oslavs detain members of civil police--General
Airey, US-UK commander in Trieste, recommends that strong
diplomatic representations be made to the Yugoslav Government
in order to obtain the release of five members of the Venezia
Giulia civil police force who have been detained by the Yugoslays
since 17 September. General Airey considers that the Yugoslav
action is "an insidious and dangerous attempt to undermine the
morale of the Venezia Giulia police," and that the detention of
these men is being synchronized with renewed Communist press
attacks on the civil police.
FAR EAST
5. KOREA: Motives for Soviet Etcmatof withdrawal?Political
Adviser Jacobs expresses his opinion that the recent Soviet pro-
posal for the withdrawal of all occupation forces from Korea in
1948 was made in order. to: (a) develop anti-US Korean sentiment
by making the US appear to be the power favoring occupation and
trusteeship; (b) becloud the issue before the UN and so avoid GA
action; and (c) induce Congress and the US public to favor with-
drawal.
Jacobs also believes that a US-USSR withdrawal would re-
sult in the Soviet domination of Korea because the Communist-
dominated North Korean Government would be in a position to
capitalize upon political disorders in South Korea.
(CIA Comment: In addition to the motives cited, CIA be-
lieves that the proposal is designed to permit the Soviet Delegation
to remain in Seoul ostensibly for further discussions but actually
for the purpose of perfecting the Communist political organization_
Such an organization would be effective in the event of GA action
favoring UN-supervised elections for a unified Korean government.)
6. CHINA: New Communist military activity in Manchuria--US Consul
General Mukden reports that fighting near Chinhsi, an important
Junction on the Peiping-Mukden railroad, is on a scale larger than
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any in Manchuria since the "Fifth Offensive" of last May. He
believes that the Chinhsi area will be an important theater in
future Communist operations and that fighting there will seriously
disrupt the Nationalist supply line from China proper to Mukden.
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In C. X . A. HAS NO OBJECTION
TO THE DECLASSIFICATION Of,
V113 DOCUMENT,
a4t.
NyAi iASTPZR1C.A
Tie. .1
1. PALESTINE: Arab assistance for uprisim in Palestine--According
to ,::he US Consul Goners:2 in jt rasa' orn, the Transjordan Prime
MAnister has declared that: (a) at the Sofa r meeting of the Political
Committee of the Arab League it was felt that in the event of an
Arab uprising in Palestine, assistance from the neighboring states
Is Inevitable; and (b) Arab leaders believe that it would be wiser
to give official sanction to armed assistance instead of striving to
prevent such intervention by the neighboring states.
FAR EAST
2. FM,INCIT INDOCIIE-TA: French operations believed imminent--
According to WI Cc-zo.7..11 Hanoi, growing evidence of French troop
c(racentrations in the ncrtorn Tonkin area leaves "little doubt
thz-;t the French wi kr)ilia an offensive from there in the first
two weeks of OctcbE-r." The Consul adds that the reports concern
the size of the tr?.4-1 concentrations ;.ndicate that the operation
will be a majoAs one see Daily Summary of 26 September, item 4).
Kr'REA: Soviet prorosal for US-USSR evacuation in 1948?US
Politica' Adviser Seonl reports that the Soviet proposal for the
ea-,.ly 1948 evacuatl.on of US and USSR troops from Korea was
fo::: the expressed puypose of permitting the Koreans to form a
c,,o.rernment by themselves, "without" the aid and participation of
tkr: US and the USSfL
(CLA Comment: This report differs from a UP report of
2C September which quotes the Soviet delegate to the effect that
Korean efforts to form a government after Allied withdrawals
would be "with" the assistance of the Allies. CIA believes,
however, that any Korean efforts to form a government will
probably be strongly influenced, either directly or indirectly, by
tho USSR.)
Document No.
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DDA Memo, 4 Apr 77
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Date :1 0 APR 1978 By:
qiioioo.gprqcgaicv.T...
CONFIEENTML
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TQP
CRIT CAL SITUATIONS
EUROPEAN RECOVERY
Premier Ramadier has again emphasized to Ambassador Caffery
his conviction that France will be out of dollars on 15 October and
that unless immediate relief is forthcoming from the US, the
future of democracy In France "will be very dim indeed."
TRIESTE
The Department of State has notified the Yugoslav Government that
the US can no longer maintain a patient attitude toward such
provocative incidents as the recent seizure and detention by the
Yugoslays of US military personnel in the Free Territory of Trieste.
GREECE
Information received by the Greek General Staff indicates that
plans are being ailada in southern Yugoslavia to establish an in
A.egean Macedonia before winter (see item I).
INDONESIA
No significant new development.
CHINA
No significant new development.
Document No. 0 74
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Auth: DDA REG. 77/1763
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Date: By:
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GENERAL
1. atakeztunort.ssauerrittla action in Macedonia believed imminent--
According to US Militaryhe ,ns e Greek Cenci-a Staff
(GGS) has received information from Yugoslavia that a combined mill-.
tary-political operation is being prepared in southern Yugoslavia to
establish, before winter, an independent Aegean Macedonia with
Salonika as capital. The report received by the GGS states that high-
est-ranking Yugoslav personnel are active in the planning, and that
junior officers speak openly of a pending thrust to the Aegean. The
MA reports that the guerrillas (materially assisted by Bulgars and/or
Yugoslays) have the capabilities for effecting such a coup and that
"the Greeks are naturally apprehensive."
(CIA Comment: CTA believes that action along the lines re-
ported is imminent. Control of Macedonia has long been one of the
stated objectives of the Yugoslav-Bulgar effort in Greece. The
preparation of some action to achieve this objective is also indicated
by reports from the US Military Representative in Sofia and by CIA
reports of a revived Satellite-Greek Communist propaganda program
designed to prepare Greek Communists for the loss of northern
Greece. Although the guerrillas are capable of controlling large
areas of northern Greece, their ability to capture Salonika would
depend on the extent of overt aid--in personnel and materiel, but
not necessarily in army units--that the Satellites would risk supply-
ing.)
EUROPE
2. GERMANY: Von Sevdlitz seen in Berlin with Soviet officers--
25X1 I General von Seydlitz,
member of the former Soviet-sponsored Free Germany Committee
(FCC), was seen in a German office in the Soviet Zone about 16 Sep-
tember. He was escorted by two Soviet officers.
(CIA, Comment: The presence of Von Seydlitz, together with
that of ex-Field Marshal Paulus and Count von Einstedel--see Daily
Summary of 19 September, item 2--all associated witIrthe former
Free Germany movement, supports other indications that the USSR
is using FCC personnel in attempting to create a nationalist party
more acceptable to the German people than the Soviet-controlled
Socialist Unity Party.)
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NEAR EAST-AFRICA
3. IRAN: Possible Soviet courses of action against Iran--US Ambassa-
dor Allen suggests that the USSR may follow certain of the follow-
ing courses, if the Majlis rejects the Soviet oil proposal: (a) request
a concession comparable to that of the British in the south; (b) regard
Iran as having joined a "hostile bloc" and open a propaganda campaign
against the ruling classes and the Majlis, coupled with economic restric-
tions and subversive activity; (c) increase infiltrations across the
border and cause disturbances in Azerbaijan and throughout Iran; (d)
invade Iran; and (e) appeal to the UN against Iran.
Allen considers (c) the most likely course. He believes the
Iranian Government will be able to cope with such a situation because
(in comparison with Greece) the Government seems to be in firmer
control of the people)and the Crown has greater popular support and
Army loyalty.
(CIA. Comment: CIA also believes that (c) is the most likely
course of action but expects that this will be accompanied by an
intensification of (b), which is already under way.)
FAR EAST
4. INDOCHINA: Possible French military campaign--US Consul
O'Sullivan in Hanoi teports that French military officers in Indochina
are confident that a fall campaign in Tonkin would: (a) cut Vietnam
supply lines; (b) isolate Vietnam through the destruction of its com-
munications facilities; (c) disrupt the Vietnam Government and elimi-
nate its important leaders; and (d) destroy the major portion of the
Vietnam army.
O'Sullivan doubts, however, that the French would be immedi-
ately able to restore their prewar-regime, but warns that long-range
external conditions might later facilitate the reestablishment of a ,
prewar status quo. O'Sullivan believes that in this event Vietnamese
hatred for the French would bring about the formation of a violently
anti-white bloc oriented toward communism.
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THE AMERICAS
5. CUBA: Dominican revolutionaries--The Chief of the Cuban Air
Force has informed the US Military Attache Havana that the Cuban
Army has confiscated all planes and arms belonging to the Domini-
can revolutionaries and that the revolutionary personnel has been
loaded on three boats now under Cuban Navy escort.
(CIA Comment: These moves against the anti-Trujillo
revolutionaries do not indicate a change in President Grau's
hostile attitude toward Trujillo. When the Dominican revolutionary
leaders finally r mlized they could not overthrow Trujillo, they
apparently precipitated Cuban Government intervention in order ?
to shift responsibility for the failure of the movement. When con-
vinced that the movement would fail, the Grau Government had to
? choose between suppressing it and running the risk that the revo-
lutionaries' arms would fall into the hands of Cuban malcontents.)
6. ARGENTINA: US and UI rain otig_Vs_ns--The UK Ambassador
to Argentina has told US Ambassador Bruce that his Government
Is alarmed over the effect on Britain's food supply that would re-
sult from Argentine cancellation of outstanding grain commitments
to the UK. (The suspension of sterling convertibility, reducing
the amount of dollars available to Argentina, is presumably Argen-
tina's justification for this contemplated action; see Daily Summary
of 25 September, item 4.)
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CRIT/CAL SITUATIONS
EUROPEAN RECOVERY
3:36,,Lm7.1a0 of failure to obtain a promise of immediate financial aid
from the US, the French Cabinet has undertaken to reorganize
the budget and to institute administration reforms in an effort
to stave off bant.cruptcy.
TRIESTE
As part of a campaign to undermine the economic independence of
the Free Territory of Trieste, the Yugoslav Government has in-
stituted a substantial reconstruction program ha the territory .
rematly -.acquired from Italy (see item 2).
GREECE
Meant new developiment.
THE C.I.A. HAS NO OBJECTION
TO THE DECLASSIFICATION OF
iNDONESIA thus DOCUMENT.
ficant new developra2rat,
No finLicant new development.
ffNA
Document No. 0 7.3
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DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Date: 1 0 APR 197e By:1
pos1-40)**40.
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GENERAL
sl?nejnUKattitude towarda arLp_mit_pererence
Ambassador Douglas has advised the Department of State that
*Jet British Foreign Office has informally expressed doubt that the
will participate in a Japanese peace conference from which China
well as the USSR is absent. Douglas adds that the UK .Ambassador
to Nanking has been told by the Chinese Foreign Office that although
C'hina has favored an eleven-power conference on the Japanese peace
tr-caty, the probable absence of the USSR may ?alter the Chinese post-
(CIA Comment: The Chinese attitude has probably been
tiirlicenced by Soviet pressure over the Dairen issue, pique over the
, tyee of the Wedemeyer mission, and the desire to push the US
to granting further military and economic aid.)
EUROPE
iGOSLAVIA: Reconstruction nrogram_tor Venezia Giulia territory--
M Ambassador Cannon reports that the Yugoslav Government has
alAxxcunced a $70 million five-year program for economic reconstruc-
tion in the Venezia Giulia area recently acquired from Italy. Cannon
Ieilieves that the program represents another step in the Yugoslav
campaign to undermine the economic independence of Trieste, but
that Its potentialities are more political than economic.
eISR: IlL2E2tests Soviet propaganda attack on Truman--US Embassy
Moscow has been authorized to make a protest to the Soviet Foreign
')Zfice concerning the "wantonly libelous" personal attack on Presi-
dent Truman published in the Soviet LITERARY GAZETTE on 20 Sep-
tember.
THE AMERICAS
4. ARGENTINA: 1.1:21,2Ampiort Argentine candidacy for SC--The Depart-
ment of State has instructed the US Delegation to the UN to support
Aegentina's candidacy for a seat on the Security Council in the probable
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event ox nomination by the Latin American countries. The Depart-
inent has further instructed the Delegation to express to the Argentine
UN representative the US view that participation in the International
.;mergency Food Council (IEFC) should accompany Argentine member-
11p in the SC, and that such participation would favorably dispose
'A.ronean nations toward Argentine candidacy in the SC.
Neotiations for US grain_purchase--US Ambassador Bruce
leves that: (aY the Argentine Trade Promotion Institute may cancel
tush export licenses for corn and wheat in order to sell to the US
.A "substantially higher prices"; and (b) in this event, the US would
probably have to carry out Argentine grain commitments to the UK.
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CI, A I, t)N S
EUROPE ti RE
CU VERY
Ul
THE C.T.A. HAS NO OBJECTIOU
TO THE DECLASSIFICATION OF
THIS DOCUMENT.
No. _I
7Auct.7 al' the nvpid detexioraticc: of Vi.n economic and political
nIty:rtlons in :Tr nor.-, and 'lady, US representatives Clayton, Douglas,
CaEaT:'y :nye vecommended to the Depatment of State that
? concresaionah conamitkees concerned 71,Tri.th the implementation of
the 3zuropean recovery program be 'a:TA vtned about 'I October and
that a sal selision ofCongrY:iss notteduled for 41ar1y November.
TMESTE
Cnx.itleaders in Trieste h.).ve.erAglraeered a general strike
.di!e Drdert weakcyat rtioi of the Allied Military
.Gov.ernayz.e.nt (3ec. item 1).
Gaf,,,T1.1!E
IA
a po'j.1.,,,ly is,?uedat al.;.12e ou 2 September,. 'i.he
l'on4.1,7,3.Ae-cl That they it. urirecessarytOli-opm
zz" icrailc-?anesia. r.:,Eseent t....tmc..!, but they
via7 neg:lenations Republic are not possible
'it goverimient. The iC,ausular
MIS:731(VA h, Et-atIV:42, aldS that tj.:1 Sezny.:?i...ty Council'v zease--
- onior on ostilitqs as not beer, fully effe&ile (see
3 igia ie:azt new deve]topinent.,
Document No. o 72
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DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Date: 1 u APR 1378By:
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EUROPE
. TRIESTE: ConmmrA_ste forst general strike--US-UK Commanding
General Airey in Trieste reports that the general strike In the city
was instigated by pro-Yugoslav Communists "acting on instructions
from the outside.' General Airey believes that the strike is not
popular, but is designed to test the strength of the Allied Military
Government and possibly to provide Yugoslavia with a new oppor-
tunity to demand that Yugoslav troops be permitted to enter the city.
2. GERMANY: limelfischer lant to be dismantled--US Political
Adviser Murphy repo?Fris rom Berlin that as a result of an OMGUS
survey, machinery will be removed from the Kugelfischer bearing
plant at Schweinfurt and turned over to the Inter-Allied Reparations
Agency. Murphy adds that the machinery will be replaced from
plants at Schweinfurt and Bad Cannstatt.
(CIA Comment: The Kugelfischer bearing plant has been
widely publicized as the most desirable reparations prize in Ger-
many. The announcement, therefore, of the decision to dismantle
It will have a strong propaganda effect in Western Europe as evi-
dence of US good faith.)
FAR EAST
3. INDONESIA: cqnfular_Somp_iissionimg_s_cpas,e7fiKe violations--
The Consular Commission in Batavia in its first report to the UN
Security Council indicates that the cease-fire order of 5 August is not
fully effective and that casualties and damage continue. The Commis-
sion s incomplete investigation shows that failure of both parties to
agree on a demarcation line has caused patrol clashes and sniping
to continue unabated. The Commission has been unable thus far to
discover any practical interim measures which would secure a more
effective observance of the cease-fire order.
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THE C.I.A. HAS NO OBJECTION
TO THE DECLASSIFICATION OF
THIS DOCUMENT.
EUROPEAN RECOVERY No.
In signing the CEEC report:European leaders emphasized the need
for US aid to Europe before the end of 1947 In order to forestall
widespread economic collapse and possible revolution.
TRIESTE
The Yugoslav Foreign Office has indicated to the US Ambassador
in Belgrade that the Yugoslav GoverrL ent des'e2es to participate
M the administration of the city pendinG the ap)ointment of a
governor.
GREELE
No significant new development.
INDONESIA
The Consular Mission in Batavia, appointed by the Security Council
to observe enforcement of cease-fire orders in Indonesia, has
submitted its first report on the situation. It is expected that the
survey will be completed by the end of September.
CITTNA
The National Government's military and political position in
Manchuria has somewhat improved as a result of effective action
by the new Commander, Chen Cheng. However, the Nationalist
position is still precarious and military initiative remains with
the Chinese Communists (see item 7).
Document No. el 71
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Auth: DDA REG. 7711763
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By:
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1. .A.ir_ale_prepar for war In Palestine--According to US
Minister Pinkerton in Beirut, the Arab League Political Com-
mittee (in secret session at Sofar, Lebanon) has issued a com-
munique stating that: (a) the Committee will oppose application
of the UNSCOP majority report by "all practical and workable
means"; (b) the Palestine Arabs will resort to war to oppose
aggression, blowing that the Arab States will supply men, money,
and material; and (c) the Committee will point out to all Arab
peoples the danger of the Palestine affair so that every Arab
"may give aid to Palestine according to his means."
2.' iarThreatalas Czec osiban ovakia discounted--
According to the US Military Attache in Prague, Ukrainian
Partisan operations in Czechoslovakia are more of a nuisance
than a real threat. (US Army Headquarters Frankfurt had re-
ported that an estimated 3,000 Partisans had reached Czecho-
slovakia and were attempting to enter US Zone Germany; see
Daily Summary of 20 September, item 2). The MA believes it
Is unwise to emphasize the military or political significance of
these bands which are composed mostly of former German
soldiers, adventurers, criminals, and individuals personally
dissatisfied with their lot.
Now' 3. Ramp...nag...Erh_lcipte of further Ruhr talks with French?The
Department of State has advised Under Secretary Clayton and
Ambassador Caffery that it approves in principle the continua-
tion of conversations with the French in order to devise some
International device for control of Ruhr production (see Daily
Summary of 18 September, item 1). The Department suggests,
however, that the talks be deferred until after Secretary
Marshall and Foreign Minister Bidault have held preliminary
discussions in New York on the fusion of the French Zone with
the US-UK Zones Germany.
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=I. TRIESTE: US maintains 1rm attitude toward Yugoslays?The
Department of State has reouested its Political Adviser in Trieste
to inform General Airey that a "most serious situation has thus
far been avoided only by his admirable and firm attitude" toward
the Yugoslays. The Department feels that this firm attitude must
be vigorously maintained and that overt and subversive Yugoslav
actions must be checked at all times.
ti. ITALY: Dunn recQuimends apgstalialmfareca_as_igkifide e --
According to US Ambassador Dunn, Prime Minister De Gasper!
has expressed his deep concern over the forthcoming vote of
confidence and has declared that he will have to mobilize every
possible support in order to pull through. (The vote of confidence
originally scheduled for 23 September has been postponed until
27 September.)
Dunn believes that immediate measures in support of the
Government may be the decisive factor and he therefore recom-
mends that the US announce the immediate granting of aid
totaling $50 or $60 million.
7-41;R: Claims Up Senators _intended to investigate USSR--
US Embassy Moscow reports that in refusing the request that a
grout of US Senators be allowed to visit Moscow "on an ftnspection
trip in connection with the work of the US Embassy," the Soviet
Foreign Office stated that: (a) the trip of the Senators "partakes
of the nature of an investigation"; and (b) "since the Soviet Union
cannot be subjected to investigation on the part of American
Senators, their trip to the USSR is not considered suitable."
si_t_p_krts lupttsli increases Moscow animosity toward US--
The US Military Attache in Moscow comments that Vyshinsky 's
speech and subsequent bitter Soviet propaganda represent a new
high in Soviet attacks on the US. The MA notes that this intensified
propaganda has had a pronounced effect in increasing local animosity
against the US.
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FAR EAST
7. CHINA: Nationalist position strengthened in Manchuria--US mili-
tary and consular officials in Mukden and Changchun report that
the National Government's military and political position in Man-
churia has definitely been strengthened through energetic and
positive action by General Chen Cheng, the new Nationalist com-
mander. Assistant US Military Attaches in Changchun estimate
that, if the Communist forces do not initiate a sustained major
offensive before 1 October, the Nationalists' chances of maintain-
ing their present lines are excellent. However, US officials in
both cities note that the local population remains skeptical of
? Chen's ability to maintain the present pace of internal reform
while simultaneously conducting effective military operations
from an extremely vulnerable position.
(CIA Comment: Although the selection of Chen Cheng as
the new Nationalist commander was a fortunate one, the National-
ist position in Manchuria remains precarious. The overall mili-
tary and political initiative continues to rest with the Chinese
Communists who are still in a position to start a sixth major
offensive or to carry out widespread sporadic operations practi-
cally at will.)
8. FIC: DJ to insilt_qz.UmLgim_e_id_independence--Accord-
trig to the T2 Consul General in Saigon, sources recently in com-
munication with Bao Dal in Hong Kong indicate that before setting
up a provisional government, Bao Dai will insist upon a much
larger degree of independence than he has been offered by Frenth
High Commissioner Bollaert.
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CRITICAL SITUATIONS
488
EUROPEAN RECOVERY
Unanimous agreement has been reached by the CEEC on the neces-
sity for establishing a Joint organization which will review the
progress achieved in the execution of the European recovery
program.
GREECE
No significant new development.
INDONESIA
The Vice President of the Indonesl...In Republic has asserted that re-
sistance against the Dutch would be continued on Sumatra even if
the Dutch should occupy the Republican capital on Java.
CHINA
The position of the National Government has deteriorated seriously
under the double impact of renewed Communist military activity
and the continued lack of US aid (see item 5.).
DomMent No. 7t1
NO CHANGE in Class. 71
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0 DECLASSIFIED
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DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Date: 1 0 APR 1978 By: j
_1 _
iitio40-**044444a.,
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GENFRAL
I. Anikkiffl iggolay intentions in Trieste--The US Political Rep-
resentative in Trieste, in concurrence with his British colleague,
submits the following views of the situation in Trieste: (a) the
twice-repeated attempt by the Yugoslays to send troops into the
City of Trieste indicates their determination to secure control of
the city; (b) irresponsible Irredentist activities by pro-Italians
may provide pro-Slays and Communists a pretext for insisting
upon participation in local government and possibly for attempting
a military move; and (c) Yugoslavia can be expected to conduct a
vigorous war of nerves against the Allied Military Government.
2. US protests Yuglagaw.rieste--The Department of
State has instructed US Embassy Belgrade to deliver a strong
protest to the Yugoslav Government against the irresponsible
actions of the Yugoslav military in presenting ultimatums to
Allied authorities in Trieste. The protest is to warn that the
US considers such actions "exceedingly dangerous and likely
to precipitate incidents leading to most serious consequences."
3. tilmaja ja_andjamagleglatjon--The Syrian Prime
Minister has informed US Charge Memminger that the Political
Committee of the Arab League has decided to submit a note to
the US and UK Governments reiterating the Arab view that
"responsibility for future events in Palestine" rests entirely
on the US and UK.
EUROPE
4. FRANCE: C. us n tt str e f DeGaulle e -US
Ambassador Caffery has been told in strictest confidence by a
high official of the Interior Ministry that the Central Committee
of the Communist Party has denied that the Communists will
immediately call a general strike in the event of DeGaulle's
return to power. Caffery believes the information to be reliable.
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V,HIS DOCUMENT.
GENERAL
No.
1. UK views on US prowsals in UN?The US delegation to UN has been
told by Gladwyn jebb of the UK delegation that the UK delegation will
support the US proposal for a General Assembly interim committee
and the restriction of the use of the veto on applications for member-
ship; but that it cannot go as far as the US on the veto question with
reference to the pacific settlement of disputes. jebb inquired of the
US delegation whether the US intended to force a showdown with the
USSR which might result in Soviet withdrawal from the UN. 'The US
delegation assured jebb that such was not the case.
2. Ukrainian Partisans fight m in Slovakia and Moravia?US Army
Headquarters Frankfurt reports that strong Ukrainian Partisan
forces have succeeded in breaking through Soviet and Satellite
troops into Slovakia and Moravia and that an estimated 3,000 of
these forces are trying to reach US Zone Germany.
'EUROPE
3. FRANCE: CoTmunistg, otas rams_ action?US Embassy Paris has
received "reliable" reports that Moscow has instructed the French
Communist Party to prepare for large-scale strikes and other mass
demonstrations. Moreover,'
Thorez has warned the Politicai Bureau that the Party must iae
ready for action "especially in the event that the Soviet Union is
obliged to depart from the UN."
(CIA Comment: Such acceleration of mass action, presumably
designed to embarrass the present French Government and force the
re-entry of the Communists in the Cabinet, would parallel the recent
wave of strikes in Italy and the country-wide protest against the non-
Communist Government scheduled for 20 September.)
1
Document No. 069
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The French official also told Caffery that unless Ramadier
has received before the end of October the assurance of obtaining
essential food and coal during the vital period prior to the im-
plementation of the Marshall proposals, "the present government
is doomed."
FAR EAST
5. CHINA: National Government seriously weakened--Ambassador
Stuart reports from Nanking that the political, economic, and
military situation of the National Government has recently
deteriorated to such a degree that the regime shows indication of
beginning to lose its "will to live." Stuart states that Communist
military activity, together with the lack of expected US aid, has
had the cumulative effect of intensifying a tendency toward panic.
Stuart believes that the position of moderate Kuomintang members
who hold important positions in the Government has been weakened
by a succession of disappointments, climaxed by the parting re-
marks of General Wedemeyer.
THE AMERICAS
6. CUBA: Dominican revolutionaries?According to the US Naval
Attache Havana, the Cuban Army has seized 13 truckloads of
munitions and bombs believed intended for use by Dominican
revolutionaries.
US Ambassador Norweb believes, subsequent to the
seizure of these munitions, that the Dominican invasion attempt
Is "rapidly crumbling."
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CRITICAL SITUATIONS
EUROPEAN RECOVERY
US objections to the first draft of the CEEC report are apparently
being met, and Foreign Minister Bevin now appears satisfied with
the procedures agreed upon at meetings of the CEEC Executive
Committee.
GREECE
No significant new development.
INDONESIA
The US has accepted the invitation of Belgium and Australia to
become the third member of the three-nation commission of
good offices to ad in the Indonesian 4' spute.
CHINA
The appointment of T.V. Soong as Governor of a south China
province appears designed to counter separatist tendencies and
to promote economic reconstruction and stability in an area
remote from civil conflict (see Item 5).
Document No. 068
NO CHANGE in Class. 0 .
0 DECLASSIFIED
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DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Date: PR 1978 By:
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AN 1
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40411"teelfrell".
lafROPE
vtANCE: Biclault to adopt definite "stand" on USSR at UN--Am-
= zFaii,3r Caffery reports from Paris that Foreign Minister Bidault
i in on the eve of Bidault's departure for New York that he was
:mined to take a "definite stand" in the UN General Assembly
'rd to the USSR.
2. GERMANY: Paulus reported in Berlin--US Political Adviser Murphy
?-:-.11fies rumors that ex-Field Marshal Paulus and Count Heinrich
Ebsiedel, prominently associated with, the Moscow Free Germany
mmittee, are in Berlin. Murphy adds that a leading German official
fr. the Soviet zonal administration states that Paulus and Einsiedel
apparently organizing a new Soviet-sponsored nationalistic move-
:rent to replace the failing Socialist Unity Party.
(CIA Comment: CIA concurs in the belief that Paulus and
;;;insiedel are in Berlin for the reasons advanced.)
NEAR EAST-AFRICA
NDIA Nehru may be ousted from premiership--US Ambassador
k Tacty has been informed by a prominent Sikh Prince that the split
1,--k the Indian Cabinet "is very serious and that Nehru would probably
cmsted within two weeks." (The Embassy has previously cited
sistent reports that Patel, conservative Minister of the Home De-
,iartment and protagonist of big business, is attempting to oust Nehru
T.;.orn the premiership of the Dominion of India.)
FAR EAST
1. KOREA: Soviet del hazar --General
Vodge reports that although the Korean Joint Commission has not
Net for ten days, the 100-man Soviet delegation shows no indication
of leaving Seoul and is actively guiding and aiding the Communists
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tn South Korea. Hodge urges that a recess be proposed for the pur-
se of forcing the departure of the Soviet delegates, because he
:pe.11eves their continued presence is an "unwarranted hazard to
3eeurity."
5. CHINA: T. V. Soong appointed Governor of --US Em-
tassy Nanking reports that Chiang Kai-shek's nomination of T. V.
Soong as Governor of Kwangtung has been accepted by the National
Government. (Soong has been in semi-retirement since last March,
then Kuomintang leaders engineered his resignation as Premier by
blaming him for China's economic crisis. Last week, however, Soong
eonated part of his domestic financial assets to the Kuomintang.)
(CIA Comment: Soong's new appointment appears designed
to counter separatist tendencies that have been developing in south
China and to promote economic reconstruction and stability in that
area, which is remote from the civil war. Chiang undoubtedly be-
lleves that Soones long financial experience and close association
%oil' the Western Powers will be valuable to the Nationalist regime.)
THE AMERICAS
6. ARGENTINA: ?RppprtsiamaAsjSag&--According to US Ambas-
3ador Bruce, Foreign Minister Bramuglia has stated that: (a) Ar-
Itentina is with the US in the ideological war against the USSR; (b)
Argentina will continue with the US in any kind of war against the
3SSR; and (c)_ it is "nonsense" to believe that Argentina is endeavor-
tig to take a "third course" between the US and the USSR. Bramug-
Be also expressed the opinion that the Soviet Ambassador's departure
or the USSR reflects Moscow's dissatisfaction with the Soviet Em-
bassy's failure to disrupt the Rio Conference by splitting Argentina
-Ind the US.
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7, ECUADOR: Recomilion of new Government recommended--US
TrInibassy Quito recommeTh-TailiarreZignize the new Arose-
mena Government on the grounds of its continuity with the previous
cmstftutional regime.
8. PERU: Anti-democratic trenstagainst US interests?US Ambassador
Cooper reports his opinion that US interests in Peru will be adverse-
ly affected if the anti-democratic trend of the Peruvian Government
continues.
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CRITICAL SITUATIONS
EUROPEAN RECOVERY
US representatives Clayton, Caffery, and Douglas have requested
permission, in view of the precarious political situation in France,
to continue US-UK-French efforts to evolve a plan to use the Ruhr
industrial potential for European recovery while still safeguarding
French security (see item 1).
GREECE
The Department of State has approved AMAG Chief Griswold's
recommendations that the temporary increase in the Greek Army
of 20,000 be extended to January and that a permanent increase of
10,000 be authorized.
ETDONE S
The British Foreign Office has indicated that it may suggest to
former Premier Sjahrir that he contact the Dutch in the hope that
discussions may pave the way for the resumption of Dutch-Repub-
lican negotiations.
CHINA
The diversion of Nationalist troops to counter the current Chinese
Communist raids along the Yangtze and Yellow Rivers will probably
reduce the Nationalist potential in critical Shantung Province and
disrupt the Nationalists' efforts to reinforce their position in
Manchuria.
Document No.
NO CHANGE in Class. E]
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0 .DECLASSIFIED
Class. CHANCED TO: TS S
DDA Memo, 4 Apr 77
Auth: DDA 1,,17G. 77/1763
Date: 1 0 APR 1978 By:
.44000.040msaips
aKiDENTIAL
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GENERAL
1. US re resentatives ask for further Ruhr talks--Under Secretary
Clayton and Ambassadors Caffery and Douglas have requested
from Paris that they be permitted to continue the US-UK-French
conversations looking to the establishment of an international
device, such as an allocating board, for the control of Ruhr pro-
duction. The US representatives add that the increasingly critical
French political situation makes the continuance of the talks more
urgent now than several weeks ago.
(CIA Comment: A solution to the ,Ruhr problem guarantee-
ing French security and affording France increased benefits from
the German industrial potential would deprive the French Commu-
nist Party and French Rightists of one of their most forceful propa-
ganda lines.)
EUROPE
2. .UK: Moiyner may resi n if arm cut below 53Q1000--US Mili-
tary Attache London reports
that Field Marshall Montgomery
will resign if he is forced to cut the army below 530,000 men by
1 April 1948.
(CIA Comment: Strong political pressure and the decision
to withdraw UK forces from India this year reduced the planned
army strength for 1 April 1948 from an estimated 672,000 to
566,000. In August the ceiling was cut to 549,000, and during the
last two weeks the army agreed to reduce its strength to 530,000.
Political pressure for further reductions will undoubtedly continue.)
3. ITALY: Dunn reports dollar crisis imminent--US Ambassador
Dunn believes that an imminent ollar crisis threatens Italy. Dunn
declares that if the crisis is allowed to break, production, trans-
portation, and employment will be so sharply restricted as to cause
a political upheaval previously unmatched in Italy. He adds that
without assistance the De Gasper' Government will fall and "demo-
cracy will be ended in Italy."
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4. USSR: Molotov calls November CFM " re ed"--US Ambassador
Smith in Moscow reports that Molotov, at e ceremony for the deposit
of the Balkans and Finnish Peace Treaty ratifications, appeared most
reluctant to join in a toast to the success of the November meeting
of the CFM and commented that the meeting was already "prejudged."
Smith adds that Molotov took the occasion "to indulge in several barbed
comments" directed at the UK Charge and himself.
FAR EAST
5. INDONESIA: Sjarifuddin amends statement on future of Republic--
US Consul Geperal Foote Batavia reports that Republican Premier
Sjarifuddin has denied his reported statement that a free Indonesian
Republic would remain within the Netherlands Commonwealth (see
Daily Summary of 17 September, item 6). Sjarifuddin declared that
his comment was to the effect that the Indonesians are willing to
cooperate with the Dutch on the basis of "de jure recognition of the
Republic." Foote suggests that the Premier's retraction was the
result of the application of pressure by military authorities who
felt that he had committed the Cabinet too far.
THE AMERICAS
6. BOLIVIA: 1211E2VlisigVS.Lblende possible,--US Ambassador
Flack has been informed in strict confidence" by a Foreign
Ministry official that: (a) President Hertzog desires two US
engineers to proceed immediately to Bolivia to examine deposits
reported to be either pitchblende similar to that in the Belgian
Congo or high grade iron; and (b) the Bolivian Government wishes
to develop these deposits with the aid of US capital.
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CRITICA L syr U.ATIONS
EUROPEAN RECOVERY
US Representatives Clayton, Caffery, and Douglas believe that any
attempt to disregard national frontiers in a program for European
recovery will lead to a dangerous degree of planned economy and
frufzate natural economic resteeation (see item 1).
GREECE
Reliable reports indicate that Soviet-trained Rumanian soldiers are
ass!eling the Greek guerrillas (see item 2).
INDONESIA
Former Premier Sjahrir, in ceiling for active participation by the
UN in solving the Indonesian probY,em?described the situation in
Indcelesia as the most acute manifestation of the world-wide eolonial
problem and warned that Dutch use of force would make an eventual
solution more difficult. Present Republican Premier Sjarifuddin has
asked for supervision by a third power of the execution of any ultimate
Dutch-Indonesiaxa agreement (see item 3).
CHINA
The recent statement by Dr. Sun Fo, Vice President of the National
Government, that China will seek closer cooperation with the USSR)
if the US does not soon extend assistance, represents another move
in the Chinese Governments diplomatic offensive to win US support.
The nossibility of a future USSR-Chinese Gevernment alignment can-
no i: be ruled out, however; because the Government is capable of
making etreme concessions to avoid ultimate political extermination.
Document No. 066
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Auth:DDAR .7711763
1 0 APR 1978Date: By:
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4.T060?4414Siiite,"0
GENERAL
1. Fr9pch s**n Port Lyautev agreement with US--US Ambassador
Caffery reports that on 15 September Foreign Minister Bidault
signed the US-French Port Lyautey agreement. (This agreement
returns Port Lyautey, now a US naval air station, to French sover-
eignty on 1 January 1948; in addition, the agreement contains a
highly classified understanding permitting the US to retain certain
laming and communication rights there.) Caffery declares that
French acquiescence took considerable courage because Bidault
would be attacked by both Gaullists and Communists if the details
of Cie agreement were made public.
2. Rumanian participation in Greek ft. htirg_ jummtecl--US Military
Delegate ACC Bucharest has been informed that more than 200
wounded Rumanian soldiers, members of a Soviet-trained division,
are being treated a a Bucharest hospital for wounds received in
fighting on the Greek frontier. The Delegate believes that the strik-
ing similarity of numerous reports recently received on this subject
and the high reliability of some of the sources clearly indicate that?
Rur.anian Communists are taking an active part in Greek guerrilla
warfare.
(CIG Comment: This is the most specific report yet received
of participation by Satellite personnel in support of the Greek guer-
rillas.)
EUROPE
3. UK: E at f Lab Pa ? osition--US Embassy London has been
informed by a reliable source in the UK Labor Party that head-
qua-'`,ers of the Labor Party thinks that it would be defeated if a gener-
al election were held now. The Embassy comments that the voting in
a recent by-election (in a working-class district), although it gave
Labor a majority, showed a "strong and unmistakable" swing to the
Conservative Party.
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(CIG Comment: A Gallup poll taken before mid-August
indicated that 52% of the British people were dissatisfied with
the Government's record, while 37% disapproved of Prime Minis-
ter Attlee. Both figures would probably be higher now.)
4. TRIESTE: Yugoslav troo s NE_ _111_1 net enter city--US Ambassador
Dunn in Rome reports that Yugoslav troops have abandoned their
intention to enter the city of Trieste (see Daily Summary of 16 Sep-
tember, item 1) after receiving instructions from Belgrade to accept
the "diplomatic situation" which requires agreement among the
three occupying powers before Yugoslav troops can enter Allied
areas.
5. CZECHOSLOVAFIA: Benes-Gottwald conversation repoUcl--US
Charge Yost in Prague reports as accurate in substance a recent
conversation between President Benes and Communist Prime Minis-
ter Gottwald in which Benes stated that: (a) the Communists are
destroying the National Front and subverting the normal political
life of the country; (b) he would not stand for non-Communist parties
being eaten up one by one as had occurred in other Eastern European
countries; and (c) he would not ease the way for a Communist coup
either by resigning or by leaving the country. The US Military At-
tache in Prague comments that Benes' action is his strongest inter-
vention in a domestic political issue since 1945 and it will probably
make the Communists proceed with caution.
FAR EAST
6. INDONESIA: Republic willing to negotiate with Dutch--US Consul
General Foote at Batavia reports that Republican Premier Sjarifud-
din stated at a press conference that: (a) Republican authorities are
prepared to resume negotiations with the Dutch; and (b) the Dutch-
Indonesian dispute could be settled with the Republic remaining
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zialuarbimaiteirmi
witht-ili a Netherlands Commonwealth as a free and independent
nation provided that a third power, preferably the US or UK, super-
vised the execution of the ultimate Dutch-Indonesian agreement.
:cote states that a three -ilatiOn commission under Security
Colman auspices would be welcomed by the Republic as a means
of ending the impasse.
4
.T.061?66Wihriaimp
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woe poilositE.
3.ITICAL SITUATIONS
45E: OPE AN RECOVERY
7..Prey.ich and Italian Communists, apparently assuming that the present
stage of the European economic situation is especially favorable to
their objectives, are currently making a vigorous effort to oust the
Ramadier anti De Gasperi governments before their positions can be
strengthened by the formulation of a European economic program.
(GREECE
Unless the guerrilla situation can be promptly liquidated, the present
American Aid to Greece (AMAG) program will fail to achieve its
jectives (see item 3).
INDONESIA
No significant new development.
CaINA
No significant new development.
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0 DECLASSIFIED
Class. C:Ik.:X.ED TO: TS S
DEA Memo, 4 Apr 77
Auth: DDA "5.1.7-7.G. 77/1763
Date :I-0- AP R 1978 By:
P78-01617A005900010001-2
A si;
25X1
45
484
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'
FTerich -74:?, 22 ": 4E %at the
stage of: tj...e 07:1711, falkor2.b1e to
their et:ila:::tive3, ar y a vigorous effort to oust the
Fla Madl f37: tetire their posi.tioas can be
strerlgthenclbi O....,3?qro,:..)aarit. economic program.
Unless till Ex.aer1111. TIzoanptly
A racy.etcan to (:cc f\ will tClq:Y.10
.0bieet iW"iS (See i:TC 171
No
A ?
No significant ew
Document No.
NO CHANGE in Class. 0
o DECLASSIFIED
Class. CAMT:D TO: TS S
DDA Momo, 4 Apr 77
Auth: DDA G. 77/1763
Date :0 APR 1978 By:
-
.114011#40~ikem
CONFIDEE!
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WiEnlimeeeltrim.
GENERAL
. .IE2rotests Ymoslav intention to occupy :kapit--The Department
of State has instructed US mbassy Belgrade to protest "in the
strongest terms" the announced Yugoslav intention to send a detach-
ment of troops into the city of Trieste. The Embassy is to point out
that, under the terms of the Italian Peace Treaty, Yugoslav troops
can be stationed only in that part of the Free Territory of Trieste
(FTT) currently under Yugoslav military occupation, which does not
include the city of Trieste. (This provision will obtain until a gayer-
aor of FTT has assumed office.) The Supreme Allied Commander
Mediterranean has informed the Yugoslav Military Commander that
he cannot allow this proposed move.
(CIG Comment: The Yugoslav Government will probably not
risk a show of force at this time but will continue to use every
possible means to create unrest in Trieste pending the appointment
by the Security Council of a governor of FTT.)
2. UK views on Trieste governor issue--According to US Embassy
London, UK Foreign Office officials believe that: (a) the US and UK
should be in no hurry about finding a governor for Trieste; (b)
since the USSR has rejected all US-UK suggestions, it is now up to
the USSR to present a satisfactory candidate; and (c) it is to the ad-
vantage of the US and UK, unless a good governor can be found, to
have the existing situation continue as long as possible.
EUROPE
3. GREECE: AMAG objectives endaered uerrilla situation--
AMAG Chief Griswold reports that the promptest liquidation of
the guerrilla situation is essential" in order for AMAG to achieve
its objectives and states that "forceful measures at this time may
avert the necessity for more dangerous and costly measures later."
Griswold urges that: (a) the temporary increase of 20,000 in the
Greek Army be continued until early January; (b) a permanent in-
crease of 10,000 be authorized; and (c) the US promptly dispatch
125 to 200 Army officers to be attached to the Greek General Staff
and to fighting units, if the British cannot furnish such assistance.
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NEAR EAST-AFRICA
4. PALESTINE: Arab upxising mmected--A Jewish Agency official
has informed US Consulate General Jerusalem that, according to
information recently received by the Agency, the Grand Mufti in-
tends to begin disturbances in Palestine without waiting for the
outcome of the UN General Assembly's deliberations on the
Palestine question.
The Secretary General of the Arab League has informed
US Embassy London that in his view an Arab-Jewish war will re-
sult from the General Assembly's acceptance of either the majority
or minority report of the UN Special Committee on Palestine.
(CIG Comment: Although an Arab uprising inspired by the
Mufti is probable in Palestine, it is unlikely that the Arab Govern-
ments will officially support the Mufti until some decision has been
reached by the UN.)
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4 83
CRITICAL SITUATIONS
EUROPEAN RECOVERY
The French Government has notified US Embassy Paris that French
gold and dollar reserves will probably be exhausted before the end
of October (see item 2).
GREECE
Guerrilla operations are increasing while the Greek Army remains
on the defensive. The guerrillas are also conducting a successful
recruiting campaign, despite the new amnesty offered by the Greek
Government.
INDONESIA
Netherlands forces are continuing to occupy new towns beyond the
line of positions held by the Dutch at the time of the Security Council
cease-fire order. The purpose of these advances appears to be to
deny to Indonesian Republican guerrilla groups established centers
from which to operate against Dutch-held areas.
CHEW.
No significant new development.
Document No.
NO CHANGE in Class. 0..4411
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Class. OIAI\TED TO: TS
D-A Menlo, 4 Apr 77
Auth: DDA 726. 77/1763
Date:1.0 An S.,' By:
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GENERAL
1. US ai_Amei_to_ withdrawal from Greece of UK battalion--In reply to
Bevin s suggestion, the US has reluctantly agreed to the withdrawal
from Greece of one UK battalion of not more than 800 troops, pro-
vided there are definite assurances that no more withdrawals will
be made until "at least" 15 December and provided no publicity
creates the impression of the beginning of a major withdrawal.
Bevin had previously told US Ambassador Douglas that this action
would: (a) improve his own domestic political position; and (b)
establish a precedent for the withdrawal of USSR troops from
Bulgaria. Bevin added that the retention of UK troops in Greece
for the winter presented the difficulty of finding cold weather
accomodations.
(CIG Comment: Bevin's remarks contrast with his hitherto
Intransigent attitude on withdrawing the UK troops. Developments
between now and 15 December will probably justify the UK's reten-
tion of troops in Greece beyond that date; Bevin's remark about
winter accomodations may reveal that he foresees this possibility.
Because USSR troops are bound to leave Bulgaria by the terms of
the peace treaty, while UK troops in Greece are under no such
injunction, to set up the withdrawal of the UK battalion as a quid
pro quo for a USSR withdrawal from Bulgaria would seem to be
an unnecessary invitation to the USSR to bargain.)
EUROPE
2. FRANCE: Gold and dollar reserves near exhaustion--The French
Government has given US Embassy Paris a memorandum declaring
that: (a) the gold and dollar reserves of the Treasury will probably
be exhausted before the end of October; (b) to maintain its current
purchases in the US until 1 April 1948, France will require approxi-
mately $600 million; and (c) lacking such aid, France must cut
down its imports of indispensable raw materials and food.
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or ornrr
3. ITALY: Dunn reco_mmaidgMAcmgementeniglial__nn fleet--US
Ambassador Dunn recommends that if the US decision is not to
accept its share of the Italian fleet, as allocated by the four-power
naval commission under the terms of the Italian peace treaty, the
full advantage of "the beneficent gesture" should be obtained by a
press release indicating that the US Intends to relinquish all such
claims.
jgg_esLt_sL..po e ut Italian army--Dunn also reports that
the Italian Army is still lacking the materiel required to establish
the minimum level of a balanced force. Dunn urges that the US
make every effort to insure that the reduced Italian forces are as
well-equipped as possible.
(CIG Comment: Adequate equipment for the Government's
troops would appear to be essential to the security of the De Gasperi
Government because of: (a) the withdrawal of US-UK occupation
forces; (b) the increasing unrest of the Communists; and (c) the
necessity for guarding the Yugoslav frontier.)
FAR EAST
4. CHINA: liattgmU.ap2g29sal to obtain US ammunition--US Ambassa-
dor Stuart has learned that Chen Cheng, Nationalist Chief of Staff
and concurrently Nationalist Commander in Manchuria, suggested
to General Wedemeyer last month that: (a) US stocks of ammunition
now in western Pacific areas should be shipped to China to meet the
urgent needs of Nationalist forces; and (b) China should concurrently
purchase ammunition in the US and ship it to the western Pacific as
replenishment. Stuart notes that such an arrangement, while entail-
ing cash payment by the Chinese for ammunition purchases, would
involve the US more closely in China's civil war.
(CIG Comment: Two likely motives for Chen's proposal
were: (a) to involve the US; or (b) to impress upon the US the
urgency of the Nationalist ammunition shortage. CIG estimates
that under such an arrangement, the transfer of ammunition from
the US to China would be set in operation only two or three weeks
earlier than it would under a direct shipment plan.)
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THE AMERICAS
5. BRAZIL: Dutra desires US aid--US Ambassador Pawley has been
told by the1 air"--rinTa7----assa or to the US that President Dutra's
Cabinet is pressing him to obtain US help, and that Dutra is "ex-
tremely distressed and annoyed" because he believes that there
has been practically no US aid, although the US has been "constantly
seeking and obtaining Brazil's cooperation."
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woommoolkeiri?
GEIXRAI,
1. CEECLEestpones .caeeting_for receiving repori--US EmbasFy Paris
reports thir-Tirtire?ComiliaTiliF rviciyea E triomic Coopera-
tion (CEEC) has decided, in response to '03 sugge.stiors, to post-
pone until 2C42 September the meeting origtkally scheduled for
15 September ior ;:he formal presentaton tie Clain, report; (b)
prior to the 20-22 September meeting the CEre will consider US
suggestions fo77 "materially irnprovirg" the r rebent draft .)f the
report.
EUROPE
CZECHOSLOVAKIA: Sudden Communist-Social Democratic ay.:pen:lent--
US Charge Yost in Prague reports that fealers of the Social Democratic
Party have suddenly beer, Induced to sign a jont Communist-Social
Democratic communique announclig an agreement to cooperate politi-
cally and to strive for tho renewal of the "Socialist bloc' within the
National Front.
Yost comments that it is difficult to see how the Social Demo-
cratic center leaders cod have been induced to reverse their previ-
ous anti-Communist position so suddenly without being subjected to
pressure. He ,Ldcis that the comnimalcue will probably seriously
jeoparfte the efforts of the right and center f3ocial Democratic lead-
ers to shift the party away from the Communists, and will further
discourage other non-Communist i)arties.
FAR EAST
3. FRENCH ZIDCCHTNA: Biciault iurware of p/enned offensii,e--French
Foretell Minister )3ida.ult has told US Ambassador Caffery G Paris
that he is not aware of any plans for a French military offensive
against Vietnam at the end of September.
Document No. 063
' Approved For Release
NO CHANGE in Class. 0 ?Aitagad
0 DECLASSIFIED 741117,
Class. CHANGED TO: TS S
DDA Memo, 4 Apr 77 i
Auth: DDA 12.7G. 77/1763
Datel 0 APR 1978 By:
NfirDP78-01617A005900010001-2
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Approved For Release 2002/0_ _1 ? CIA-RDP78-01617A005900010001-2 482
TOP G44.100%. LPT"'"
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un,',',11 2 ft..) 3pa.117.1belr? otigaLally schedalc?cl for
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Document No. 063
NO CHANGE in Class. 0
0 DECLASSIFIED
Class. CHANGED TO: TS S ktiV"
DDA Memo, 4 Apr 77
Auth: DDA RG. 77/1763
Datej? 0 APR 1978 By: _
lirmow opmptowia
CONFIDENTIAL
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CONFIalF.NTIAL 18 SEP 1947
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11:464FFEIRCEIN""
481
CRITICAL SITUATIONS
EUROPEAN RECOVERY
Ambassador Douglas has been instructed to explain to Foreign
Minister Bevin that the US believes that certain revisicns of the
CEEC draft should be undertaken at the 15 September meeting of
the Foreign Ministers of the CEEC nations (see item 1).
GREECE
The general situation in Greek Thrace has become so bad that the ?
whole area may fall under the control of the guerrillas (see item 5).
INDONESIA
No significant new development.
craNA
The Natilmal Government has renewed its plea for US materiel and
ammunition (see item 7).
Document No.
NO CHANGE CHANGE in Class.
0 DECLASSIFIED
Class. CIAIZC2D TO: TS S
DDA Memo, 4 Apr 77
Auth: DDA R2G. 77/1763
Date: 1.0 APR 197$ By:
7.6
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oT?444a0643SRiglifimme
GENERAL
1. Bevikam,:g views on CEEC Forele_Ministers' meeting--The
Department of Stare has asked Ambassador Douglas to explain to
UK Foreign Minister Bevin that the US welcomes the 15 September
meeting in Paris of the Foreign Ministers of the sixteen countries
of the CEEC, but hopes that they will not rubber-stamp the report.
The US feels the meeting should: (a) seek to revise the present
report to incorporate elements considered essential by the US;
(b) indicate that the report is only a preliminary study; and (c)
agree to leave the technical working groups in session to make
possible revisions in the final report.
Douglas has also been asked to urge Bevin to drop his
objection to the inclusion of the bizonal area in CEEC considera-
tions. (Bevin appears to feel that inclusion of the area would
offend the French and jeopardize the November CFM.)
2. US oli on re arations from US-UK Zones Germany--The Depart-
ments ? e aTiaWriiaireTiiirgaVer?Triera Wand Ambassa-
dor Murphy that: (a) no reparations are to be delivered from the
US-UK Zones Germany until after the conference of the CFM in
November; and (b) preparations are to be made for the resumption
of deliveries to certain countries immediately after the Conference.
If the Conference does not obtain the economic unification of Germany,
the US plans to suspend indefinitely all reparations deliveries to the
USSR.
3. USSR-Czechoslovak air arzamtn_lents--US Embassy Prague reports
that Czechoslovak air authorities, following discussions with the
Soviet Deputy Chief of Civil Aviation, have secured the use of the
Soviet airport at Berlin in operations to Scandinavia, but have failed
to gain permission to fly through Soviet territory and through the
Balkan States to Turkey.
(CIG Comment: The USSR, while prepared to assist and
exploit Czechoslovakia's international air operations, is apparently
unwilling to sponsor a Czechoslovak air route to Turkey through
the Balkans, foreseeing a Turkish demand for reciprocal rights to
overfly Rumania and Bulgaria.)
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4. MIR requests withdrawal of US Naval Atta.che Odessa--The Soviet
Government has requested US Embassy Moscow to close the Assist-
ant Naval Attache 's office in Odessa by 15 September. The Depart-
ment of State has requested Embassy Moscow's recommendations
regarding the feasibility of securing Soviet permission to establish
a consulate at Odessa. (The USSR requested in the summer of 1946
that the Odessa office be closed, along with several others estab-
lished during the warlbut granted a US request to allow it to remain
open until the completion of UNRRA operations in that port.)
EUROPE
5. GREECE: Guerrilla control of Thrace feared imminent--The US
member of the UN Sub-CoMmission in Salonika, Lieutenant Colonel
Miller, has informed US Military Attache Athens that the guerrillas
will be able to assume complete control of Greek Thrace unless
steps are taken to alleviate conditions in the area before cold
weather sets in. Miller stressed the need for immediately arming
and organizing civilians under military supervision so that they
can defend their own localities, thus releasing Greek Army forces
to conduct aggressive action against the guerrillas. The MA be-
lieves that Communist control of Thrace would be followed by
Bulgarian annexation of the area, "which probably could not be
rectified peacefully."
NEAR EAST-AFRICA
6- IRAN: Clarification of US position mA_Alt--According to US
Ambassador Allen, the impression is gaining in Iran that "the
great powers have made an agreement on Iranian oil." The presi-
dent of the Majlis has sent word to Allen that if the US allows a
false impression of its attitude to remain uncorrected, few deputies
will remain firm in the face of Soviet threats. (Ambassador Allen
sought to reassure the Iranians in an address delivered to the
Iran-American Relations Society on 11 September.)
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FAR EAST
7. CHINA: National Government renews ressmtior US Erigitm aid--
US Embassy Nanking reports that the Chinese National Government,
In renewing its plea for US materiel and ammunition supplies, has
emphasized the desperate shortage of ammunition in the Nationalist
Army. US Military Attache points out, however, that because of
an inadequate inventory and supply system, the Chinese actually do
not know whether or not there is an ammunition shortage.
(CIG Comment: While Chinese ammunition supplies are
believed to be fairly low, the shortage is probably less critical
than represented. Moreover, Chiang Kai-shek, in a reported
speech to Kuomintang members recently asserted that the National
Government could carry on its war against the Communists for one
or two years, if necessary, without foreign aid.)
THE AMERICAS
8. DOMINICAN REPUBLIC: Revoluttonarttu_sna attemAkyasion--
The Navy Department has informed the Commander in Chief of
the Atlantic Fleet that, according to a "reliable source," the
Dominican revolutionaries (now based on an island off the northern
coast of Cuba) may attempt landings in the Dominican Republic
before 15 September.
(CIG Comment: It continues to look probable that a revolution-
ary invasion will be unsuccessful if attempted.)
9. VENEZUELA: Rumored invasion from the Dominican Republic--
The Acting Venezuelan Foreign Minister has Ii ieflie1TrCharge
in Caracas that a "not overly reliable" source expected an "armed
blow from Santo Domingo" on 11 or 12 September. The Acting For-
eign Minister added that if the attack occurred, the Venezuelan Gov-
ernment would "take retaliatory steps immediately."
(CIG Comment: Such an attack would presumably be made
by Venezuelan revolutionaries based in the Dominican Republic and
not by Dominican troops. Rumors that such an invasion attempt would
be made under ex-President Lopez Contreras' leadership, have been
current for several months. CIG estimates that: (a) such an attack is
at present improbable; and (b) ff attempted, it would be unsuccessful.)
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480TOP iJJRThT
CRITICAL SITUATIONS
EUROPEAN RECOVERY
The UK has Instructed its representatives to counteract US efforts
to obtain a revision of the present draft of the Committee for Euro-
pean Economic Cooperation (see item I).
GREECE
Surrendered guerrillas report that the "free Greek government"
will soon hold elections for its General Assembly (see item 5).
INDONESIA
Recent requests for the formation of an armed Chinese security
corps within Indonesian territory have been rejected by the Re-
publican Government. Chinese official circles have become in-
creasingly concerned over the heavy casualties suffered by
Chinese nationals in Indonesia. Such an attitude tends to direct
Chinese sympathy toward the Dutch in DV security Council discus-
sions.
CHINA
In Kuomintang meetings now being held, National Government lead-
ers have reportedly expressed the determination to reform and
rejuvenate both Party and Government and to crush the Chinese
Communists, by military force. The Government's ability to achieve
either objective remains in doubt, although some form of "purge"
ad reorganization can be expected.
Document No.
06/
NO CHANGE in Class.
0 DECLASSIFIED
Class. CIANCED TO:
Auth;
Date:
TS 5
DDA Memo, 4 Apr 77
UA 71-G. 77/1763
U APR 1978 By:
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MiNPNIFICOMMammi
GENERAL
1. UK opposed to US views on CEEC report--US Ambassador Wiley
reports that the UK Ambassador in Lisbon has received two circu-
lar telegrams from the UK Foreign Office instructing him to make
representations which would counteract US efforts to obtain a re-7
vision of the present report of the Committee for European Eco-
nomic Cooperation (CEEC). According to Wiley, the UK Foreign
Office has slated that: (a) any delay of the final report beyond
15 September would endanger all progress made in Paris; and
(b) all US views on the substance of the report should be commu-
nicated to the committee in Paris and not to the 16 governments
concerned.
2. Views of Norwamletherlands and Sweden on CEEC --The Deputy
Foreign Minister of Norway has informed US Ambassador Bay
that the Norwegian delegates to the CEEC have been instructed
in accordance with US views on the present draft of the report.
Bay adds that the Norwegian Cabinet is fully sympathetic with the
broad objectives of the US.
US Embassy The Hague reports that the Netherlands Minis-
ter of Economic Affairs is in sympathy with US objectives in re-
gard to European recovery. The Dutch official points out, however,
that the US should realize that obtaining the cooperation of the 16
nations in producing the present accomplishments is an important
achievement under present political and economic conditions in
Europe.
US Minister Dreyfus in Stockholm reports that Swedish
sentiment regarding the European recovery program reveals no
sense of urgency and tends to emphasize the difficulties involved
in implementing any mutual aid program. Leading Swedish bankers,
according to Dreyfus, attribute the critical European economic situ-
ation to a dollar shortage rather than to lack of production, and this
explanation, supported by Communist propaganda, is receiving con-
siderable popular acceptance.
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3. UK to consider delay troop withdrawal from Greece--In reply
to US Ambassador Douglas representations for the retention of
UK troops in Greece (see Daily Summary of 9 September, item 2),
Bevin stated that he would: (a) submit the considerations put
forward by the US to the Prime Minister and the Defense Committee;
and (b) do his best to keep the troops in Greece beyond the "date
fixed." Bevin stated that the UK troops could probably not be re-
tained in Greece beyond the end of this year. (The UK had earlier
indicated its intention to withdraw the troops during the fall.)
1,40 4. Possible Yugoslav bid for SC_js_cslan --According to US Ambassa-
dor Cannon in Belgrade, the composition of the Yugoslav delegation
to the General Assembly suggests that the Yugoslav Government
may make a bid to replace Poland on the Security Council in 1948.
Cannon points out that among the principal delegates there is only
one active Communist and that the delegation is "the best Yugo-
slavia can offer in affability."
(CIG Comment: Gromyko stated on 2 September that the
USSR favored the Ukraine as Poland's replacement. In view of
almost certain Western opposition to the Ukraine, the USSR may
be grooming Yugoslavia as its second choice.)
EUROPE
5. GREECE: "Free government" re rted planning to hold elections--
US Consul General Salonika has learned from the interrogation of
eight surrendered guerrillas that: (a) the guerrillas have been told
to pick candidates for the General Assembly of the "free govern-
ment" prior to the elections to be held during the period of 16-26
September; (b) heavy ordnance, including field artillery pieces, is
to be supplied the guerrillas immediately after the elections; and
(c) a steady stream of German small arms is reaching the guerrillas
from across the Greek border.
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rAR EAST
6. FRENCH INDOCHINA: French offensive indicated--US Consul
O'Sullivan at Hanoi reports that: (a) according. to all indications
a French offensive against the Vietnam Government is scheduled
for late September; and (b) French military circles, with "amaz-
ing confidence," expect the campaign to be completed in about
three months. O'Sullivan states that the emphasis in these opera-
tions will be placed as much on killing or capturing Vietnam
leaders as on the destruction of Vietnam forces.
?
7. CHINA: GovernmepoedunwillinggrantS1nkiagautonorn
US Embassy Nanking reports informartion
25X1 Ithat General Chang Chih-chung,
Chief of the Generalissimo's Headquarters in northwest China, will
probably urge the Chinese National Government to grant immediate
autonomy to Sinkiang Province.
the Nationalist Government will not accept Chang's recommendations
but may publicly promise that autonomy will be granted eventually,
(CIG Comment: Chang, who is a responsible and capable
official, would probably recommend immediate autonomy in the con-
viction that the Government's present military capabilities are in-
adequate to defend Sinkiang against the new native rebellion which
is believed to be imminent in the northwestern part of the Province.)
THE AMERICAS
8. ARGENTINA: Objectives at UN Assembly_--US Ambassador Bruce
In Buenos Aires has been informed by the Argentine Delegate to the
UN that Argentine interests in the current session of the Assembly
will be: (a) to "fight Communism in every way possible"; (b) to
favor partition in Palestine; and (c) to advocate revision of the UN
Charter to include abolition or at least modification of the veto.
The Delegate declared that "we will get rid of Franco" if the anti-
Communist members of the UN decide that: (a) the Franco regime
is of no value in the fight against Communism; and (b) the Spanish
question should not be postponed. He also expressed the view that
the Marshall proposals should be extended to the Western Hemisphere
since failure to do so would "put Europe ahead of the Americas,
which also have disease, malnutrition, and poverty.
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CRITZC L UATIONS
ETTRCq)AN RECOVERY
Although UK Foreign MhliStel.' Bevin has indicated his disagreement
with the US proposal to revise the CEEC report, the Foreign Ministers
of ten other countries have exprc:ssed their fundamental agreement
with the US proposal. (see item 1).
GREECE
No significant new development,
INDONESIA
While in ,Washington, Acthlg C,-ov.rAtor General Van Mook indicated
that he holds little hope for a ON setilement of the Indonesian situation,
aatavia, the US Consul Ge, .r1 ;Anticipates little difficulty in placing
observers in order to obtain information on the UN cease-fire order
In the shortest possible time,
;IMRE A
No significant new develoymenis al.e expected on the Korean prob;cm
prior to its presentation before the UN General Assembly some time
later this month,
CHINA
No significant new development.,
Document No. 060
NO CHANGE in Class. o. ?Laid
0 DECLASSIFIED
Class. CHANGED TO: TS S
DDA Memo, 4 Apr 77
Auth: DDA EEG. 77/1703
Date: 1 APR 1978 By:
- 1 -
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CONITOrr'q
L.
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?Tidar DE ORM'
GENERAL
1. D2c:6,:tiLlin1sters'views on revision of CEEC report--US Ambassa-
dor Douglas has been Taz-by ore stiFirevin that the
countries participating in the Committee for European Economic
Cooperation (CEEC) have gone as far toward a cooperative effort
as possible and that the US proposal for revision of the CEEC re-
port would cause dismay and might "so impair national sovereignty
that many countries would rebel."
Full agreement, however, with the US view on the proposed
revision of the CEEC report has been expressed to US representa-
tives by the Foreign Ministers of Austria, Belgium, Denmark,
Iceland, Italy, Portugal, and Turkey who have indicated that they
would institute action to revise the present report.
The Foreign Ministers of the Netherlands, Norway, and
Switzerland have indicated general sympathy for the US proposal
to revise the report but have given no definite commitments to US
representatives.
EUROPE
2. USSR: Accep_t_sILS_e_ptember date, for dtposits--US Embassy
Moscow reports that the USSR has agreed to a deposit of ratifi-
cations of the Italian and Satellite peace treaties on 15 September.
NEAR EAST-AFRICA
3. AN Position vis-a-vis USSR weakenedby Bevin's attitude--
A ccordiliFiCit?TS A.nbilTa-Sii?r? A leTt7ITIZToreign
recent advice to the Iranian Government not to close the door to
further Soviet-Iranian oil negotiations has been interpreted by the
Shah and Qavam as an indication that the UK has weakened before
Soviet threats against Iran and now wishes Iran to grant the USSR
an oil concession (see Daily Summary of 6 September, item 1).
The Shah, in informing Allen that Qavam is preparing some sort
of oil proposal for the USSR, appeared resigned to the inevitability
of such a move in view of Bevin's advice.
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(CIG Comment: Unless the UK alters its present position,
Iranian determination to resist Soviet pressure will rapidly dissi-
pate, and the extension of Soviet influence in Iran will be expedited.)
THE AMERICAS
it DOMINICAN REPUBLIC: Possible las,di_s_of US marines?US
Charge Burrows M Ciudad Trujillo has indicated that: (a) armed
protection of US lives and property would "very probably" be
unnecessary in the event of a revolutionary outbreak; (b) such
protection should be sent only upon the US Embassy's request;
and (c) he has so informed the District Marine Officer in Puerto
Rico. (The Commander in Chief of the Atlantic Fleet had previously
asked for an estimate of US marine requirements in the event of
revolutionary activities.)
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CRITICAL SITUATIONS
EUROPEAN RECOVERY
Ambassador Douglas in London has been instructed to urge UK
officials not to oppose the discussion in the CEEC of the economic
program of the US-UK German Zone (see item 1).
GREECE
The new amnesty which the Greek Government intends to extend
to the guerrillas will probably not be effective because the Com-
munist leaders are expected to demand exorbitant political conces-
sions before issuing a cease-fire order. However, the amnesty
will demonstrate the good faith of the government in seeking peace
and will place responsibility for continuance of the war squarely on
the Communists.
INDONESIA
Following conversations with Department of Stateofficials, the
Netherlands Ambassador and Acting Governor General Van Mook
have indicated Dutch willingness to abide by Security Council
mediation in Indonesia by means of a three .nation commission.
Two of the members of this commission, selected by the parties
to the dispute, are Australia and Belgium; the third member may
be the US or the UK.
KOREA
No significant new development
CHINA
Chinese Communist military capabilities for offensive action in
Manchuria have become strengthened recently (see item 4).
Document No.
NO CHANGE in Class. 0
0 DECLASSIFIED
Class. CAANC=D TO: TS S
DDA Memo, 4 Apr 77
Auth: DDA --G. 77/17611
- 1 - Date: 10 APR 1978 By: I
CONFIDEnill
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ANi11s?4314iiiitef"
GENERAL
1. US to u,Tae UR to include bizonal JASEE, IQ:port?The
Department of State has instructed US Ambassador Douglas to
urge UK officials to agree to a discussion of the German bizonal
economic program in the Committee for European Economic Co-
operation (CEEC). Douglas is to point out that the failure of the
bizonal area to participate in the preparation of the CEEC report
would: (a) jeopardize the economic recovery program; and (b)
render difficult the position of the US in urging a cooperative
approach to the CEEC while the US-UK Zones fail to cooperate
In the report.
2. Marshall informs Bevin of US thinking on Middle East--US Ambas-
sador Douglas has been requested to inform Bevin that Secretary
Marshall agrees to a joint review of the whole US-UK position in
the Middle East by top military and political officials, looking
toward an understanding in regard to a common policy. Bevin is
to be informed that: (a) "the fundamental cornerstone'. of US
thinking on the Middle East is the mainte ance of the UK's position
there; (b) the US counts heavily on continued close US-UK cooper-
ation in the area; and (c) UK troops in Greece symbolize US-UK
determination to insure Greece's continued independence, and their
withdrawal would be interpreted as an abandonment of joint re-
sponsibility. Douglas is to add that the US joint Chiefs of Staff
believe that the withdrawal of UK troops would not only cause a
marked deterioration of the US-UK strategic position in the entire
Mediterranean area, but might well provoke a critical situation in
Greece itself and would leave the US no course of action which
could fully offset the adverse effects.
EUROPE
3. ITALY: Commission set up for Franco-Italian customs union--US
Embassy Rome reports that documents establishing a mixed com-
mission to study the formation of a Franco-Italian customs union
are scheduled to be signed forthwith by representatives of the two
nations. The commission plans to hold its first meeting in Rome
before 15 September and to present its report by the end of 1947.
2-
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FAR EAST
4. CHINA: Military j.itt_.iAion in Manchuria favors Chinese Communists--
US Consul General Mukden believes that Chinese Communist mili-
tary capabilities in Manchuria are now greater than before the May-
June offensive because: (a) the Nationalists have lost seasoned troops
and mobility; (b) the recent change in leadership of the Nationalist
Manchurian command has created temporary confusion; (c) the Com-
munists have had time to consolidate recent gains and to shorten
supply lines; and (d) the Communists can live on the forthcoming
domestic grain harvest while Nationalist soldiers from China proper
must be fed imported rice. The Consul General believes that the
Nationalist potential, although increased by recent arrivals of troops
and ammunition, is inadequate for anything more than defensive
operations.
(CIG Comment: A new Chinese Communist offensive in Man-
churia will probably be launched within the next few weeks.)
THE AMERICAS
5. ARGENTINA: Police accord against Communism recommended?US
Ambassador Bruce has reported that in his view the present moment
is "appropriate" for arranging a liaison between US and Argentine
police for combatting Communism and has requested information re-
garding any US-Argentine discussions of this subject at the Rio
Conference.
The Department of State in reply to this request has stated
that, according to Foreign Minister Bramuglia, Argentina would like
to conclude a secret anti-Communist pact with the US. The Depart-
ment comments that the US, though fully aware of the dangers of
Communisnalbelieves that anti-Communist measures can best be
adopted by individual countries.
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CRITICAL SITUATIONS THE C.I.A. HAS NO oBJEoTIoN
TO THE DECLASSIVTMION 07
THIS DOCUMENT,
EURPPE AN RECOVERY No. j
US representatives have been instructed to inform the sixteen
governments participating in the CEEC that the US desires a re-
casting of the present draft of the Paris Conference report and
postponement of the present 15 September deadline (see item 1).
GREECE
Guerrilla strength is increasing to such an extent that, unless
corrective meas res are soon taken, the Greek Army will be un-
able to assume the offensive. The inability of the Army to control
large areas has already resulted, in the flight of 150,000 villagers
to large towns, thereby increasing unemployment and economic
dislocation.
INDONESIA
The Australian and French representatives at Batavia have re-
ported to the Consular Mission that conditions are "quiet" within
Republican territory. Meanwhile, Acting Governor General Van
Mook is in Washington in order to clarify the Netherlands position
and to seek US influence in securing prompt issuance of the Consu-
lar report (see item 6).
KOREA
C. The US Delegation reports that the loint Commission has been un-
able to agree on a joint report. Because US efforts to reach a
solution of the Korean problem at a higher level have been blocked
by the Soviet refusal to participate in four-power conversations, the
Joint Commission will probably continue stalemated until the whole
Korean problem is brought before the UN General Assembly.
CHINA
No significant new development.
- 1 -
CONFIDENTIAL
Document No. C' 523
NO CHANGE in Class. E] I
0 DECLASSIFIED
Class. CHANGED TO: TS S
DDA Memo, 4 Apr 77 i
Auth: DDA REG. 77/1763
Date:1 0 APR 1978 By: _.] I? 5X1
5X1
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4441?1811WIROPosi
GENERAL
1. US requests revision of CEEC rep9rt--The Department of State
has instructed US representatfres to he sixteen governments
participating in the Committee for European Economic Coopera-
tion (CEEC) that the US desires: (a) the improvement of the
present CEEC draft; and (b) the continuance of the Conference
after the issuance of a revised draft in order to develop more
concrete proposals "for mutual and self help" among the partici-
pating countries. The Department proposes to secure a tentative
report by about 21 September which will conform to US major
policy lines and will be subject to later revision.
2. US view on allocation of Saar coal to France--The Department
of State has informed the French Government that; (a) although
the US is willing to discuss the subject of Saar coal at the forth-
coming Berlin conference on Ruhr coal problems, it will not
support the immediate allocation of Saar coal to France; and (b)
if the November meeting of the CFM does not produce an agree-
ment concerning the integration of the Saar into the French eco-
nomy, the US will support such integration if the French Govern-
ment will fuse its zone in Germany with US-UK zones.
EUROPE
3. FRANCE: Prest e of Ramadier Government at new low--US
Embassy Paris believes that despite the recent vorrorFonfidence,
the prestige of the Ramadier Government is now lower than ever
before. The Embassy indicates that although the Government will
probably continue in office until the October municipal elections,
its inability to remedy the present division of the Socialist party
makes unlikely its survival much beyond that date. The Embassy
reports its view that in case of a complete economic collapse, the
chances that the Communists will gain control will be greatly en-
hanced; but, in the event of continued deterioration, "the most
likely solution" will be the return of DeGaulle.
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4. ITALY: Government threatenedAy wheatja_ta e--US Ambassador
Dunn reports that the Italian Government's decision to restore the
pasta ration on 1 November despite inadequate grain imports may
have grave political repercussions. The Embassy has been told by
a Cabinet member that the USSR may be willing to supply the wheat
necessary to meet the ration this winter, provided that Communists
and left-wing Socialists are taken into the Government.
FAR EAST
5. JAPAN: Soviet reaction to US-sponsored Japanese peace treaty--
US Ambassa or m oscow repor a o en '? e press re-
action to US proposals for a Japanese peace treaty. Smith believes
that the Kremlin may be convinced that its control of key areas in
East Asia and its "satisfactory" influence in Manchuria will enable
the USSR to remain aloof from an Allied peace conference without
harming its position in the Far East and will leave the USSR free
from obligations in post-treaty Japan.
Smith anticipates that the USSR will base propaganda attacks
on the theme of US-dominated action in Japan and will redouble
efforts to infiltrate Japan and foment social and political unrest to
the maximum.
(CIG Comment: The Soviet press has for some time strongly
attacked US-sponsored Japanese peace proposals. Should a peace
conference be held without USSR participation, increasingly violent
attacks can be expected. The USSR is unlikely to attend the confer-
ence on US terms.)
6. INDONESIA: Pur ose of Van Mook's visit to US--US Embassy The
Hague reports that e purpose of eige?Corior General Van
Mook's visit to the US is to emphasize that the Dutch cannot remain
In Indonesia longer than three to five months under present circum-
stances, and that Van Mook will therefore seek US influence in
expediting a Consular report on the Dutch-Indonesian dispute. The
Netherlands Foreign Office has indicated to the Embassy that if
the Consular report is unfavorable, the Dutch may feel obliged to
withdraw from Indonesia and submit the problem to the UN.
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ODORDT THE C.I.A. HAS NO OBJECTION
TO THE DECLASSIFICATION OF
THIS DOCUMENT.
GENERAL
No. _I
I. Bevin a ears to favor an Iranian-Soviet oil agreement--US
Ambassador Allen in Telwan believes that divergences between
the US and the UK policies on the Iranian-Soviet oil question
threaten to be serious at this time. Allen states that Foreign
Minister Bevin's latest instructions to the British Ambassador
indicate that Bevin not only retains his hope that Iran and the
USSR will enter into an oil agreement but also that the UK
should use its efforts to bring this about.
FAR EAST
2. FRENCH INDOCHINA: French o timistic al2pAr4illamwtlEs--
US Consul Hanoi reports that the French remain unaltera 7
optimistic" about the prospects of success in widespread military
operations (expected at the beginning of the fall dry season). The
Consul comments, however, that French military equipment is in
very poor condition, and believes that Vietnamese guerrilla activi-
ties will continue to disrupt any French operations.
Document No.
NO CHANGE in Class. 0
Class. CHANGED TO: TS S
E] DECLASSIFIED
DDA Memo, 4 Apr 77
Auth:j2piillE2,21a.n3
Date :l! APR 1918 By
OP C1IIillWl
CONFIDENTIAL
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475
5 SEP 1941
CRITICAL SITUATIONS
EURQPEAN RECOVERY
French anxiety to maintain political stability in order to further
the European recovery program has been a prominent factor in
enabling Ramadier to win a strongly-contested vote of confidence.
GREECE
A government under the Liberal leader, Sophoulis, has reportedly
been formed. Although on the surface the government will be broad-
ly representative, the coalition will actually be an uneasy one, and
it is doubtful whether the presence of Liberal elements will at this
late date produce any effective clange in the policies established
by the old Cabinet.
DID ".)NE
High level discussions in The Hague on the Indonesian situation are
stymied by contrasting views of Dutch officials (see item 3).
KOREA
The USSR has still not repkied to the US note of 25 August proposing
feetrepower conversations beginning 0 September in Washington.
COS.NA
No significant new developmeet
Doaument No. 40.5-6
NO CHANGE in Class. 0 ltaksal
0 DECLASSIFIED
Class. CIO= TO: TS S
tTA Momo, 4 Apr 77
Awth DDA, P.G. 77 1763
Dt QftPR 197R By: _
CONFIDENTIAL
44440.4i,01444*--
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GENERA'
1. Australia desires to_participee in Korean conversations--The US
Embassy in London reports that the British Foreign Office has
not replied to the US proposal for four-power conversations be-
cause of difficulties occasioned by Australian demands for partici-
pation, The Embassy states that the UK will agree to participate
but, in order to placate Australia, will request that an Australian
official accompany the UK representative as an ebserver or
adviser.
(CIG Comment: Under the terms of the Moscow Agreement,
Australia has no legal claim to participation. licwever, exclusion
from the conversations would produce an adverse Australian reaction
which might indirectly result in E upport of the Soviet position and
cause severe tannage to present harmonious US-UK-Australian
relations in the Pacific.)
EUROPE
2. GREECE? Rumor ef all out ettnek frnii orth discounted?Accord-
ing to the
preparations fbr a bulky and blitz attack"
along the entire Greek northern frontier prior to 16 September.
the attack will be launched by guerrillas, assisted
by the armies of northern neighbors, and that Soviet troops will par-
ticipate only in the event of foreign interference in defending Greece.
'believes that eastern Turkey is to be attacked. I
comments that an attack on Greece is unlikely at this time, and that
the report may be a "plant" in the current war of nerves.
(CM Comment: No tangible evidence which substantiates this
rumor has been received to date. While an increase in guerrilla
activity this fall is highly probable (see Daily Summary of 2 September,
item 6), CIG considers direct participation by the Albanian, Yugoslav,
and Bulgarian armies unlikely. Such action would obviously have far-
reaching international repercussions and might even involve the USSR
in a world war for which it is unprepared. The likelihood of direct
participation by Soviet troops in Greece or Turkey at this time is
so remote that it need net seriously be considered,)
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FAR EAST
3. INDONESIA: Dutch high-level talks blocked by cli,p2mesige4--US
Ambassador Baruch The Na.gue reports that Dutch high-level talks
on the Indonesian situation, following the arrival of Acting Governor
General Van Mook on 2 September, have become a "tussle" between
Van Mook who is adamantly for "decisive action to end clashes with
irresponsible Republican troops? and Van Royen, Deputy UN General
Assembly delegate, who is apprehensive of possible Security. Council
economic sanctions should the SC resolutions not be respected.
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CRITICAL SITUATIONS
EUROPEAN RECOVERY
Acting Secretary Lovett's statement concerning the necessity for
immediate action in relieving the European economic crisis has
greatly encouraged the leaders of the Committee for European
Economic Cooperation in Paris.
GREECE
King Paul and Greek political leaders are engaged in extensive con-
versations with Ambassador MacVeagh and Loy Henderson in an
effort to form a new government with will meet with general ap-
proval in both Greece and the US.
INDONESIA
Consular officials representing Security Council powers in Batavia
have met in accordance with the Security Council s request and
have decided to obtain the aid of military officers of the SC powers
In observing the implementation of the cease-fire order in troubled
areas of Java and Sumatra.
KOREA
The US Delegation to the joint Commission has rejected the latest
Soviet counter-proposal for the establishment of an independent
Korean government on the grounds that such action would violate
the Moscow Agreement and would result in the establishment of
Korea as another Soviet Satellite.
CHINA
Although Wedemeyer's departing statement continues to be re-
garded in China as a major humiliation and is receiving bitter
criticism, the immediate effect is believed to be beneficial in
that it has spurred efforts for reforms (see item 4).
1
Document No.
NO CHANGE in Class. El ,,c,ahtliag
El DECLASSIFIED
Class. CHANGED TO: TS S
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Date: 10 APR lila By:
CO NFIDENT!"' I
44itiii414#1
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WaiimrsCo?00411
GENERAL
1. conflmri..1 upatE.211.11nberra Conference--Australlan Minister
for External Affairs Evatt has gala-ixT7 memorandum for Secre-
tary Marshall concerning the British Commonwealth Conference at
Canberra on the Japanese peace settlement that: (a) the broad re-
sult a the Conference was a recognition of US leadership in the
-Pacific area and a confirmation of General MacArthur's Initiative
in urging an early settlement with Japan; (b) agreement was reached
'or a two-thirds majority voting procedure with denial of any veto
right; and (c) the Conference was an outstanding success in further-
ing US-British Commonwealth relationships.
US Naval Attache Melbourne states in his report on the Con-
ference, however, that little was achieved at the Conference, that
Evatt was rebuffed by other delegates in his attempts to nominate
Australia as British Commonwealth spokesman at the Japanese
Peace Conference, and that delegates from Canada and New Zealand
refused to commit their Governments to any Australian proposals
on the grounds that the Canberra talks were exploratory only.
? 2. capadiantfor anti-Soviet action in UN--US Ambassador
%Iry Atherton in Ottawa has been told by a high Canadian official that
Canada would: (a) support in the UN General Assembly any reason-
able initiative on the Greek problem that would "put the Russians
back on their heels"; and (b) be prepared to contribute troops in any
icolYective" action relating to a Greek border patrol.
3. pS sugg Se 'tember date for trea de It--The Department
(Stte has proposed to the governmen O t K, the USSR, and
France that ratifications be deposited on 15 September in Paris
for the Italian peace treaty and in Moscow for the Satellite treaties,
If that date is agreeable to the three governments.
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FAR EAST
4. CHINA: Wedemeyer statement spurs efforts for reform?US Consu-
late Genei lbhangl reporgifiriar-w Mraifrgrtgrou general
Chinese reaction to the Wedemeyer statement has been a rankling
sanse of humiliation, the general effect of the statement has been
to shake lethargy and to spur efforts for reforms. The Consulate
also reports a well-informed Chinese view that Chiang Kai-shek,
thspite his bitter reaction to the Wedemeyer statement, will probably
go to considerable lengths to follow Wedemeyer's advice and will
take drastic action provided only that it does not include accepting
American "supervision."
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4 5
CR" ? ICAL SiTUATIONS
EUROPEAN RECOVERY
US officials in Paris recommend that the US continue informal
talks with the French concerning the establishment in the German
peace settlement of some device for international control of Ruhr
production.
GREECE
Reports indicate that the Communists in Italy and France, along
with the governments of the Satellite States, are prepared to give
official support to the "Free Greek Government' whenever it can
be established on Greek soil by guerrilla action.
INDONESIA
The COMMISE11011 of consuls in Batavia, headed by the US Consul
General, has met for informal discussions prior to the submission
of the joint report on the Indonesian situation requested by the UN
Security Council.
KOREA
The Department of State does not expect the USSR to participate
in the four-power conversations on Korea. In the meantime, the
Soviet Delegation to the joint Commission has apparently been
ordered to remain in Seoul (see item 4).
CHINA
Another open rebellion against the Chinese. National Government
by the ni group in Sinkiang Province, with possible Soviet support,
is considered likely (see item 5).
Document No. 0 -.if"-
NO CHANGE in Class. n
0 DECLASSIFLTD
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D]JA1!onio, A-7' 77
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Date: 10 APR 1978 -
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GENERA L
1. Pero:n offers cooperation against Communism--US Ambassador
Bruce reports that he has been told by President Peron that
Argentina is willing to "go all the way'' in meeting President
Truman's views on Communism and desires to make an agree-
ment with the US (see Daily Summary of 11 August, item 4).
Ambassador 3ruce adds that Peron has expressed regret that
he had been unable to meet President Truman to discuss the mat-
ter with him.
2. ,Eyatt"s _intentions_at UN General Assembly?Australian Minister
for Foreign Affairs Evatt has indicated to US Ambassador Butler
th.F4t he intends "to go after the Russians" in the forthcoming UN
General Assembly meeting. Evatt also made it clear to Butler
that he desires the presidency of the General Assembly.
S. Cardinal Spellman possible Papal Secretagy_of State?According
Cardinal Spellman has been
aesagnated as the next Papal Secretary of State.
FAR EAST
-3. KOREA: USSR unlikely to accept_ USproppsalq--The Department
of State has informed the US Political Adviser in Seoul that it
does not expect the USSR to take part in the four-power conver-
entions suggested recently to Soviet Foreign Minister Molotov.
The Department states that in the event of a Soviet refusal it
will present the whole Korean problem to the next session of the
UN General Assembly.
;oyiet Delegation to remain in Sepui?Political Adviser
3zeobs reports that the Soviet Delegation to the Joint Commission
;les abruptly changed its plans for departure and now is apparently
orepared to stay in Seoul until October. Jacobs believes that the
Delegation has been told to remain because of the recent arrests
of South Korean leftists which damaged Soviet political plans.
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5. CHINA: Imminence of Ili rebellion in Sinl_sa An --The US Consul
in Sinkiang -Px.ovince has been.informed that the last re-
sponsible representative of the Ili group (which dominates north-
western Sinkiang) has left Tihwa, the provincial capital.
(CIG Comment: This development increases the proba-
bility of another Ili rebellion against the Chinese National Govern-
ment, similar to the rebellions of 1944 and 1946,and may also
foreshadow a USSR-sponsored autonomous authority in Sinkiang.)
THE AMERICAS
6. ECUADOR: Reyolution caitinues?US Embassy Quito reports that:
(a) Carlos Mancheno has resigned in favor of a three-man civilian
junta; (b) Mancheno is leading the defense of Quito against the in-
surgent forces that are converging on it from the north and south;
and (c) the diplomatic corps in Quito proposes to mediate the
conflict.
7. BRAZIL: Requests US help to meet wheat shortage?US Ambassador
Pawley reports that, according to President Dutra and other high
Brazilian officials, Argentina's failure to fill its wheat shipment
quotas, under its reciprocal trade agreement with Brazil, will pro-
duce a bread shortage this fall that could strengthen the position
of the Communists and endanger the Dutra Government. Pawley
adds that Dutra: (a) desires US help either in the form of wheat
shipments or in representations to the International Emergency
Food Council (IEFC); and (b) indicates Brazil's willingness to
rejoin 1EFC immediately.
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erro-
1CONFIDENTIAL
CRITICAL SITUATIONS
?
041 s 194/
EUROPEAN RECOVERY
US officials in Paris believe that the expectation of a deficit after
1952 in Western Europe is based upon the continuation of a higher
standard of living than European production will support (see item 3).
472
GREECE
The Chief of Staff of the Greek Army has expressed his fear to the
King that, unless the political crisis is resolved, there will be serious
disturbances within the Army. Active participation in political affairs
by Array leaders is believed to be foreshadowed by the Chief of Staff's
warning. Meanwhile, the Communists are reportedly preparing heavy
attacks for October (see item 6).
INDONESIA
The Dutch Government has nominated Belgium to the three-nation
"good offices" commission proposed by the Security Council to
help solve the Dutch-Indonesian dispute. The Republic is expected
to nominate Australia to this commission. The third member expected
to be nominated is the US.
KOREA
No significant new development.
CHINA
The Chinese National Government appears unduly optimistic about
the military situation in Shantung Province, currently the most
active area of conflict in North China (see item 7).
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1. Bevin reserves "definite answer" on UK troops in Greece--Bevin?
has toldbs Ambassador Douglas that three make
the UK Government most anxious to withdraw British troops from
Greece: (a) the US was given notice? more than a year ago, that the
UK considers the purpose of the troops to have been accomplished;
(b) the UK Government is under great pressure which can no longer
be resisted, from within the Labor Party to withdraw the troops;
and (c) most importantly, US policy in the Middle East is unknown
to the UK Government.
In reply to Douglas' statement that British troops in Greece
are symbolic of US .43K joint responsibility, Bevin stated that his
colleagues are very anxious to withdraw the troops but that he
"would not now give a definite answer." As a "purely personal"
suggestion, Bevin recommended that the US and UK jointly review
the whole position in the Middle East in order to arrive at a "gentle-
man's understanding" in regard to a common policy and joint responsi-
bility throughout the area, with "the British acting as the front and the
US supplying the moral support."
(CIG Comment: The recent intransigence of the UK Govern-
ment regarding the withdrawal of its troops in Greece appears to
be a bargaining position taken to obtain US support for certain UK
aims in the Middle East.)
2. Ear1L2stab1ishment of Greek puppet government foreseen--US
EmbasSinaicow expec. i?- .s?up anc recogr?ifie a Greek
puppet government prior to the 16 September meeting of the UN
General Assembly. The Embassy believes that such a development
is foreshadowed by the hasty Soviet action in completing ratification
of the peace treaties, and considers that an international brigade to
support such a puppet government, if not in actual existence, is at
least in an advanced stage of organization.
The Embassy's opinion is based on the following considera-
tions: (a) recent Soviet propaganda is depicting Greek internal strife
as a major civil war (see Weekly Summary of 29 August, page 9);
(b) deposit of the peace treaty ratifications before 11 September, as
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recently proposed by the USSR, would free the Hungarian, Rumanian,
and Bulgarian Governments of present restrictions on their sover-
eignty and enable them, together with the USSR and its other Satellites,
to recognize a "free" Greek government; (c) UN Delegate Gromyko
could then sponsor the new Greek "government" before the General
Assembly; (d) after the establishment of a Greek puppet government,
an international brigade could be openly supported as a group of
"freedom-loving volunteers" and would facilitate Soviet control dur-
ing the period of conflict.
(MG Comment: CIG concurs in the Embassy's views regard-
ing an international brigade and in the Embassy's belief that the USSR
may recognize a new Greek government prior to the meeting of the
General Assembly; see Weekly Summary of 22 August, page 6.)
3. CEEC Chairman's views on European deficit after 1952--Sir Oliver
riaaT,TrE?la man?orMVOrniiiittlreia- uirge-a-TiWnomic Co-
operation (CEEC), has told Under Secretary Clayton that Western
Europe can be self-sustaining by 1952 only if: (a) currencies of
the area are made completely convertible so that export receipts
from one part of the world can be transferred to other areas to
meet dollar needs; (b) markets for export surpluses are available;
and (c) a readjustment of trade conditions is arranged to correct
the disparity between the prices of imported raw materials and the
prices of exports. Clayton believes that Franks' expectation of
deficit economy in Western Europe after 1952 is based upon a
higher standard of living than Europe's productivity will support.
EUROPE
4. USSR: Embassy suggests US stop wheat for Eastern Euro--US
Embassy Moscow suggests, in order to forestall an anticipated
Soviet offer of considerable wheat to France prior to the French
municipal elections, that: (a) the US cancel its wheat allocations
to Eastern Europe and divert the shipments to France; and (b) the
extent of US shipments to France be publicized in every possible
way.
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(CIG Comment: Numerous reports indicate a successful Soviet
harvest, and CIG believes it probable that the Kremlin will use surplus
grain in a political maneuver in France.)
5. RUMANIA: Possible chann Government--Acting US Political
Representative Melbourneeen inla??med by a source who "enjoys
the confidence of leading Communists" that the Communist inner
circle is considering the appointment of Gheorghe Dej, Communist
Minister of Economy, to replace Premier Groza. Source states that
Dej is being considered because a strong figure with a direct line to
the Kremlin would help Communist efforts to resist Western pressure
for carrying out peace treaty terms. Melbourne comments that such
a step would be consistent with recent Communist consolidations in
both political and economic spheres.
6. GREECE: Heavy guerrilla offensives planned for October--
I iiiiirts from Athens that at recent meungs o
both Satellite and Greek members of the Communist Party, the follow-
ing points were presented: (a) with the world divIdIn into armed
camps of the East and the West, it is "now or never for the Com-
munist Party in Greece; (b) although only small accomplishments
can be expected from the guerrillas at the moment,in October "new
and heavier" weapons will be available which will permit the seizure
of "capitals and small cities"; and (c) plans are being considered
for the apprehension of right-wing personalities, including British
and American, who can be "traded' for prominent left-wingers held
by the Government. the tenor of the meetings
indicated that the new Balkan Council would take over complete con-
trol of the Greek Communist effort.
FAR EAST
7. CHINA: Chinese Communists hold initiative in north China--According
to US Embassy Nanking, the Chinese Nationa Government is unjusti-
fiably optimistic about the military situation in Shantung Province.
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The Embassy states that although some local Nationalist victories
have been scored, the Chinese Communists have maintained the
military initiative and appear to be preparing for new offensive
operations to be coordinated with the anticipated Communist offensive
In Manchuria. The Embassy adds that the three Chinese Communist
commanders in the Shantung-Ronan area represent "the best Com-
munist strategic and tactical talent in north China."
THE AMERICAS
8m DOMINICAN REPUBLIC: Government requests data on "invasion"?
The Dominican Government s aske ?reign Udders of pie
American Republics to furnish information concerning the anti-
Trujillo revolutionaries allegedly assembling in Cuba. The Govern-
ment further insists that Dominican charges about an "invasion force"
can be "directly and immediately" verified and takes exception to
the "evasive" attitude of the Cuban Government
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